Fixed vs. Variable Costs: Apple iPhone 5

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Fixed versus variable costs: Apple iPhone 5
All costs can be divided into two basic categories: fixed costs and variable costs. "Fixed costs are costs that are independent of output" and the company cannot alter these costs, no matter what the demand for the product (Variable cost and fixed costs, 2012, Economics Fundamental Finance). "These remain constant throughout the relevant range and are usually considered sunk for the relevant range (not relevant to output decisions). Fixed costs often include rent, buildings, machinery, etc." (Variable cost and fixed costs, 2012, Economics Fundamental Finance). In the case of Apple, such fixed costs might include the costs of subcontracting with manufacturers to make the iPhone 5 as well as the costs to keep Apple's own facilities running while engineers troubleshoot the new product. There is limit to how much a company can alter its fixed costs, although fixed costs usually do not increase dramatically in the short term, either. In the long term, of course, Apple can renegotiate its contract with the companies with whom it outsources; find cheaper places or methods to manufacture the iPhone, etcetera. But the key aspect of fixed costs is that regardless of how many iPhones it chooses to manufacture, Apple cannot alter those costs very much over the course of the initial phases of production.
Factors which affect fixed costs include the availability of outsourcing, which Apple has famously (some would say infamously) capitalized

sales for Apple iPhone 4 3
3) Using the budget Data, what was the total expected cost per unit if all manufacturing and shipping overhead (both variable and fixed) were allocate to planned production? What was the actual cost per unit of production and shipping? 3
4) State the differences between a static budget and a flexible budget. Prepare Flexible budget for 160,000 iPhone 4’s 4
5) Prepare Flexible budget for 180,000 iPhone 4’s and calculate flexible budget variances using actual costs for August

ECO/365
Apple Inc.
The Apple Company is one of the most successful firms in the cellular phone market. Although the company has not always been on the top, they found a way to surpass other competitors through the quality and pricing of their products. Today, we can walk through most superstores and find Apple’s products.
Apple was started in 1976 when Steven Wozniak and Steven Jobs joined forces. Wozniak created the Apple I which Jobs suggested they try to sell. The Apple I was not very

INTRODUCTION
DANSHUI Plant No.2 is located in southern China was a contract manufacturer that assembled electronic products for companies wishing to save labor costs. DANSHUI was getting a one-year contract with apple Inc. to assemble 2.4 million iPhones. It was very anxious when in the first three months of the contract, the plant is unable to be assembled as many as the expected and its operating at a loss.
The plant has had difficulty hiring enough workers despite raising wages to 35%. In

Apple is involved in the design, development and marketing of personal computers (PC) and related software, peripherals, network solutions, portable digital music players, and associated accessories. The company’s portfolio of offerings comprises Mac computing systems, iPods, iPhones, and servers .The company’s software applications include Mac OS,iLife , iWork, and internet applications like Safari and QuickTime, among others. The company mainly operates in the US. It is head quartered in Cupertino